Shahzad,

have you changed the include to use
<font=monspace>
#include <AT89x52.h>


from the normal include?

Also have you done anything 'special' like changing the base address for the code generation.

I use SDCC for programming the AT89C52 and have never had a problem (well only ones caused by bugs in my programs)

I can put up the source for my working programs, and how I build them if you think that might help.

Chris.